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Louisiana makes cuts to healthcare to spare higher education

Questica

March 30, 2016

As Louisiana lawmakers continue to look for solutions to overcoming the state’s projected $900 million deficit, the state’s health care system is being asked to take on funding cuts to spare reductions to higher education.

In his latest budget proposal, Gov. John Bel Edwards announced he plans to overcome $70 million of the shortfall through cuts to the state’s Department of Health and Hospitals. The cuts will be spaced out over three months and will allow Louisiana to forego further budget reductions for public colleges and universities, the governor said.

“Higher education has suffered the deepest budget cuts of any higher education system in the country over the last eight years more than $700 million,” Edwards said in a statement. “In addition to that, we are asking them to fund $28 million for TOPS scholarships this year that will come directly out of campus budgets. Therefore, at my direction, DHH has taken a sharp pencil to its budget, scrutinized its spending patterns closely under our first full year of our new private-insurance style Medicaid program, and found ways to make some very painful cuts.”

“The Department of Health and Hospitals is being asked to take on $70 million in cuts.”

Under the governor’s proposal, $30 million will come from savings associated with changes to the state’s Medicaid program. Another $30 million comes from a reduction in DHH contracts and services. DHH will also be asked to implement a 1.5 percent reduction in all its contracts, both public and private. The remaining $10 million will come from DHH administrative costs.

How the cuts affect services

In an analysis of the budget plan, The New Orleans Advocate found much of the proposed budget reduction will change how Louisiana’s public hospitals are able to pay their service provides. The plan calls for a $10.3 million reduction in rates paid to companies managing Bayou Health, the state’s Medicaid program. The state’s 10 public-private hospitals will see $6.9 million cuts in their contracts, and all DHH contracts will be trimmed by $1.9 million. Finally, the state’s Pediatric Day Health Care Program, which provides care for children with special medical needs so their guardians can return to the workforce, will see a $500,000 funding reduction.

As The Times-Picayune previously reported, potential cuts to the pediatric day care program have been a source of controversy among state lawmakers. The program is designed to provide care to children whose medical needs are too great for public schools to properly address, including children who rely on ventilators and feeding tubes. However, DHH Secretary Rebekah Gee recently testified to the state congress that children with attention deficit disorder have also been unnecessarily placed in the program. The health day care program is the fastest growing DHH service. Since it was started in 2011, its budget has grown from $1 million to a projected $30 million by July 1.

Despite some concern over the pediatric program, many state lawmakers and hospital administrators said the cuts were not as bad as had been expected. In a press conference, Edwards said while the cuts would not be easy, they were a more practical solution than further cuts to higher education, which he could not call for “in good conscience.”

“There’s nothing painless about any of these cuts,” Edwards told reporters. “At the same time, we have to be as smart as we can in how we move forward and allocate these cuts. That’s what we’re doing.”

“Edwards said the cuts were a more practical solution than further reductions in higher education.”

In a statement released to The New Orleans Advocate, the University Medical Center in New Orleans said the outlook for its budget was not as grim as had been anticipated.

“The state and legislators had to make difficult decisions to find a solution to the budget deficit,” the hospital said. “A $6.4 million cut is significant, but it is a better outcome than the previously proposed cut, which would have been catastrophic.”

How Questica can help

Though cuts to health care systems may be necessary for a state’s overall budget, they still present a financial challenge for heath care institutions. With Questica’s health care budgeting software, hospital administrators can take advantage of flexible and streamlined budgeting tools that also maintain security and regulatory compliance.

With its Operating and Capital budget platforms, Questica is able to offer a web-based system for financial forecasting that is scalable to any size institution. Customizable analytics, including the Salary/Position Planning and Performance platforms, give administrators greater insight into controlling their greatest expenses while also carefully monitoring how changes to the hospital’s budget affect the care provided to its patients.

Health care administrators should contact Questica to learn how flexible performance and financial management tools will help adjust to changes in state funding and overcome budgetary hurdles.

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